You rent a car for $29.95. the first 165 miles are free, but each mile thereafter costs 16 cents. you plan to drive it 200 miles. what is the marginal cost of driving the car? the marginal cost is $5.60 plus the cost of gas. the marginal cost is whatever can be purchased with $29.95 plus $32. the marginal cost is $29.95. the marginal cost is the average cost of gas for all miles driven.

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Business

Leland

11 October, 11:08

You rent a car for $29.95. the first 165 miles are free, but each mile thereafter costs 16 cents. you plan to drive it 200 miles. what is the marginal cost of driving the car? the marginal cost is $5.60 plus the cost of gas. the marginal cost is whatever can be purchased with $29.95 plus $32. the marginal cost is $29.95. the marginal cost is the average cost of gas for all miles driven.

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Tommy Joseph · Answer 1

The correct answer is the marginal costs are 16 cents per mile for miles above 165 plus the cost of gas. Therefore the marginal cost is $5.60 plus the cost of gas. The initial payment can be forgotten because it is a sunk cost; it is not part of marginal costs.